AZN3 Jan 2010 16:33
source:sunday times
Iain Dey ASTRA ZENECA Last year’s rally in the FTSE 100 index was fuelled by out-of-favour companies bouncing back from the brink of disaster. Now that the market has returned to higher levels, picking winners is a tougher game. Defensive companies are beginning to come back into favour with analysts and strategists.
Astra Zeneca, the pharmaceuticals giant, is generating so much cash that analysts at UBS reckon it could raise its dividend. The shares are trading on less than eight times this year’s forecast earnings and already offer a prospective dividend yield of about 5%.
Concerns about some of its big drug patents expiring have hampered the shares. However, Astra Zeneca sealed two deals in December that have brightened the outlook for its pipeline of new products. Its £220m takeover of the French antibiotics firm Novexel and a £720m deal to buy the rights for a new manic depression treatment were welcomed by the market. Tax breaks on research and development announced in the pre-budget report also bode well for the sector.
Astra Zeneca should be a solid investment in an uncertain year but it could also come up with some nice surprises. Buy at £29.10